John Malone, the Chairman of Liberty Media Corp (NASDAQ:LMCA), is weighing a deal for Time Warner Cable Inc (NYSE:TWC), through Charter Communications, Inc. (NASDAQ:CHTR), according to Dealbook.
Michael J. De La Marced and Brian Stelter in their article in Dealbook feel John C. Malone will most likely use the combined company to roll up other cable operators, upsetting the dominance of giants like Corporation (NASDAQ:CMCSA).
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John Malone’s Liberty Media Corp (NASDAQ:LMCA) has 27 percent stake in the cable operator Charter Communications, Inc. (NASDAQ:CHTR). He is known for concluding shrewd deals resulting in transformation of telecommunications industry.
In April, John indicated that more consolidation is waiting to be done in the telecommunications industry. This has lifted the speculation in various companies including Cablevision Systems Corporation (NYSE:CVC), privately held Cox Communications, besides satellite TV providers Dish Network Corp (NASDAQ:DISH) and DirecTV (NASDAQ:DTV).
John’s remarks also provided ammunition to the share price of Charter Communications, Inc. (NASDAQ:CHTR) and Time Warner Cable Inc (NYSE:TWC), both posting a double-digit percentage return.
Michael J. De La Marced and Brian Stelter feel combining cable or satellite television companies would provide them with more negotiation power while dealing with programming providers such as The Walt Disney Company (NYSE:DIS) and Viacom, Inc. (NYSE:VIA).
Merger Could Blunt Challenge From Intel
As reported earlier, Intel Corporation (NASDAQ:INTC) is contemplating new initiatives to demonstrate its thinking outside the PC box through a nationwide TV service in the US later this year.
The proposed merger contemplated by John Malone could also blunt new challenges Intel.
John Malone Optimistic On Broadband
Michael J. De La Marced and Brian Stelter note the maturing cable television could decline in the future. However, John Malone is quite optimistic on the growth of broadband as the emerging online rivals to cable TV such as Netflix , Inc. (NADAQ:NFLX) and Hulu would require faster data connections supplied by companies like Charter Communications, Inc. (NASDAQ:CHTR).
Cable companies could be benefited if the government permits them to charge their Internet customers for heavy data usage. John Malone indicated last month that cable companies could sell various tiers of connectivity in the future.
Though Dish Network Corp (NASDAQ:DISH) might have abandoned its bid for Sprint Nextel Corporation (NYSE:S), Dish said it would now focus instead on its bid for the wireless carrier Clearwire Corporation (NASDAQ:CLWR).
Dish Network Corp (NASDAQ:DISH) is thus pursuing its hopes of creating a new pairing satellite TV and wireless broadband services.
If the deal between Charter Communications, Inc. (NASDAQ:CHTR) and Time Warner Cable Inc (NYSE:TWC) fructifies, the combined entity would garner about 15 million television subscribers, making it the third-biggest such services in the United States, next only to Comcast Corporation (NASDAQ:CMCSA) and DirecTV (NASDAQ:DTV). Besides, the successful deal would make them the second-biggest broadband provider, behind Comcast.
Meanwhile, Time Warner Cable Inc (NYSE:TWC), the second-largest U.S. cable operator, recently has discussed strategic options, including a possible acquisition with Cablevision Systems and Cox Communications, according to a Reuters report.